President Joe Biden‘s decision on Sunday to drop his bid for a second term in the White House was “yet another curveball for equity investors,” according to RBC Capital Markets analyst Lori Calvasina.
So far this year, investors have exhibited “the same amount of discomfort in talking about the US election and its stock market/economic implications in our meetings that one might feel by staring at the sun for too long,” Calvasina wrote in a Monday analyst note.
How the stock market will react to Biden’s historic decision “remains to be seen,” she adds.
“The main thing we've been remembering,” Calvasina says, “is how so many of the US-based investors we've spoken with this year seemed to want different candidates.”
Enter Vice President Kamala Harris, who received Biden’s endorsement Sunday to be the 2024 Democratic nominee. As of Monday afternoon, former House Speaker Nancy Pelosi also endorsed Harris.
In a separate note, other RBC analysts predicted that Harris — like Biden — would be “negative for biotech overall.”
Recall how Biden’s Inflation Reduction Act, which passed without a single Republican vote, capped drug prices. Insulin, for example, now costs $35 per month for seniors with diabetes.
Harris will “likely be required to defend Biden’s record” on that legislature, RBC analyst Brian Abrahams said.
“In the past, [Harris] has supported initiatives such as Medicare for All (more expanse than the current Affordable Care Act),” he added. “While this concept could broaden utilization, a single-payer system could have more leverage to negotiate drug prices and manage formularies.”
Oppenheimer analyst Jason Helfstein said Biden’s exit from the race may boost spending on political advertising, which may benefit digital advertisers The Trade Desk, Inc. TTD, Snap Inc. (SNAP), the parent of Snapchat.
Pepperstone analyst Michael Brown expects the change in the presidential race to cause volatility across asset classes.
The U.S. dollar may weaken as the possibility of the “Trump trade” unwinds and the prospects of a Democratic victory increased, he said per a CNBC reported.
While Brown predicted that stocks will fall in the near term, those declines should be viewed as medium-term buying opportunities, since the Federal Reserve is still expected to cut rates.
Price Action: The Trade Desk gained 2.36% to $98.28 as of Monday’s mid-day trading as Snap picked up 1.60% to $14.63.
Health care stocks, at last check, were mixed:
- Eli Lilly & Co. LLY ticked up 1.44% to 869.81
- Novo Nordisk A/S NVO gained 1.06% to $132.93;
- United Health Group Inc. UNH slipped 1.27% to $558.15
- Johnson & Johnson JNJ declined 0.18% to $154.41.
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